Ratio analysis
This query is : Resolved
20 January 2013
Is the standard ratio of Debt equity is 2:1?
Why not 1:1 as it is better than 2:1?
and what is the logic behind this standard form of debt equity ratio?if we consider risk factor debt is good and if we consider cost factor equity is good.i always confused in this point.
Why not 1:1 as it is better than 2:1?
and what is the logic behind this standard form of debt equity ratio?if we consider risk factor debt is good and if we consider cost factor equity is good.i always confused in this point.
20 January 2013
Ratio analysis as such is always regarded to be CRUDE indicators. 2:1 is the very very general indicators. Please go through the topic on "trading on equity" "financial leverage", the confusion will be over. In power sector, capital intensive projects, this ratio may be as high as 7:1
23 January 2013
Debt Equity of 2:1 means 67% of Debt and 33% of Equity.
This ratio will generally be insisted by Financiers to ensure satisfactory participation of borrowers through 33%.
In practice, banks are now ok with Overall Debt Equity of 3:1 and only for Project 2:1 are insisted.
1:1 is the ideal situation. But on tax savings angle 2:1 will be preferred.
This ratio will generally be insisted by Financiers to ensure satisfactory participation of borrowers through 33%.
In practice, banks are now ok with Overall Debt Equity of 3:1 and only for Project 2:1 are insisted.
1:1 is the ideal situation. But on tax savings angle 2:1 will be preferred.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- GST on export of services and Input Credit
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- ITC temporary reversal and reclaim
- TDS U/S. 194NF
- Applicable TDS rate for sale of property in Nov 2024
- Tds on building rent monthly
- MIS MATCH OF INVOICE NUMBER
- VERIFICATION OF REFUND RELATED
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
